FPL proposes charging customers to upgrade emissions

When the federal government issued new air quality guidelines in 2010 to protect the elderly, children, and people with asthma from nitrogen oxide emissions, Florida Power & Light took notice.

The 48 gas turbines that the company uses to fire up quickly during peak demand rely on 1970s-era technology. Although the company touts a record of having power plants that are “67 percent cleaner than the national average,” it also acknowledges that these older so-called “peaker” plants emit some of the most toxic pollutants.

In order to comply with the new standard, FPL decided it was time to replace all of its peak demand turbines between now and 2016 and, in June, it proposed a $822 million project. The costs would be borne by customers based on a monthly fee – FPL estimates it is less than 75-cents a month for customers that use 1,000 kilowatt hours – and added to the portion of the bill used to comply with environmental regulations.

The proposal would allow the company to replace aging generators in Broward and Lee counties, avoid a lengthy rate review by utility regulators, update its emissions technology and still give the company a revenue boost that would allow it to increase its profits.

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But not everyone agrees with FPL that this was the right approach and, on Tuesday, FPL will ask the Public Service Commission to dismiss its proposal while it conducts a series of environmental tests. The goal, the company said, is to come back and ask for the rate increase again, once the tests are complete.

“It could be the same project; it could be a different project,’’ said Mark Bubriski, Florida Power & Light spokesman.

When the new proposal does come back, it will have to overcome several hurdles. The Florida Department of Environmental Regulation, which regulates power plant emissions, said it wanted FPL to conduct tests first to determine the extent to which the existing plants are polluting now.

JR Kelly, director of the Office of Public Counsel which represents consumers in utility cases, opposes FPL’s request, calling it an inappropriate use of the environmental cost recovery clause. He argues the company should go through a full rate review. Kelly also suggested FPL had not explored less expensive alternatives, such as purchasing other power plants rather than replacing its old ones.

And the companies that pay some of the biggest utility bills, the Florida Industrial Power Users Group, argued that complying with federal regulations “does not compel FPL to install new generating capacity” and that FPL is not allowed to raise its rates until 2017 under the terms of a settlement agreement it entered into with them.

Even environmentalists are not siding with FPL on this one.

“This is another example of where FPL is gaming the regulatory system to add to their rate base,’’ said Susan Glickman, Florida director of the Southern Alliance for Clean Energy. “We have no confidence these are legitimate costs because Florida does not have a transparent, least-cost utility planning process. We should look at how solar and energy efficiency competes to get the best deal for consumers.”

Because the peaker plants fire up during the hottest summer days and coldest winter nights, often at times when auto traffic is heaviest, the odds of the plants violating the federal standards are high, Bubriski said.

Nitrogen oxide is formed from vehicle, power plant and industrial emissions and the new federal standard requires that the concentration of the dangerous gases not exceed the standard within a one-hour period. The previous standard had been based on a yearly average of emissions

Bubriski said FPL is committed to its project, and to using the environmental cost recovery clause that allows the PSC to approve it as a pass-through cost, even if it allows it to avoid the deeper scrutiny of a rate review. He said the company used the clause to pay for construction of its solar power plant in Arcadia, for example.

“This is what we have determined to be the most cost effective to our customers,’’ he said. “We believe we need to comply. We’re proud of our clean record. This is the right thing to do.”